Daily Brief Equity Bottom-Up: AEM Holdings: More Short-Term Pain; Highly Attractive Valuation for Long-Term Investors and more

• AEM (AEM SP) published dismal 1Q24 results and kept its modest guidance for 1H24.
• AEM has announced new customer wins going into FY25 which should improve results materially next year. The sell-side has downgraded estimates aggressively making room for upside surprises next year.
• AEM has seen an implosion in investor confidence because of the inventory issues, and slow orders from its key customer Intel Corp (INTC US). Long-term investors should accumulate here. 

• Samsung and LG are launching new gaming and AI-focused monitors to take advantage of the recovering market.
• Tata Elxsi is collaborating with Arm on self-driving vehicle solutions, while Saudi fund considers cutting ties with China for US chips and AI.
• Samsung and SK Hynix are competing in the HBM market, driven by demand for high-bandwidth memory solutions. Toyota plans to invest JPY2 trillion in supply chain, EV, and SDV, with Tata making progress in semiconductor manufacturing.

• Hotel rooms in China decreased by 5.4% compared to the previous year
• H World has maintained its position as a leading hotel operator in China with a diverse portfolio of brands
• Founder Qi Ji’s strong track record in the hospitality industry has contributed to H World’s success in navigating challenges and growing its presence in the industry.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• FY2023 Success: Daikin achieved record-high sales and profit, driven by FX impacts. Despite challenges like reduced demand, the Air Conditioning business expanded in key markets.
• Ambitious Targets: FY3/25 targets include surpassing previous financial records, despite continued sluggish demand.
• Cautious Outlook: While optimistic about market share gains, reservations persist, particularly regarding heat pumps. Stock performance remains steady, trading in line with historical averages.

• Tower is a pure-play analog semiconductor wafer foundry that manufactures SiGe, MEMS, RF, embedded flash-based memory, analog/mixed-signal, and CMOS image-sensor devices in the US, Israel, and Japan.
• It is serving markets in mobile such as RF High Position analog, as well as in CMOS image sensors, and power management.
• It also added a new fab in Italy in partnership with STMicro that has just started shipping product and whose capacity will continue to ramp over the next two years.

• Stable cement price, good cost control, and a better base for comparison will lift Anhui Conch Cement (914 HK)‘s profitability recovery in 2-4Q24.  
• Anhui Conch’s earnings outperformed in 1Q24. Its peers are making losses and hence will reduce excess supply. Stabilisation of the real estate market will lower the pressure on demand.
• Net cash equals 46% of the current share price, and its valuations (both PER and P/B) are inexpensive relative to peers and ROE.  

• Committing to raising production capacity –Shofu announced its fifth medium-term plan, covering the four years from FY3/25 to FY3/28.
• The core message is that the company has competitive products and high demand visibility in overseas markets, and is reaching the point of attaining annual sales volume of ¥50bn.
• The plan will involve significant capital allocation to raise production capacity and other business investments to meet its goals. zed.

• It’s an exciting 1Q24 result that revenue and GM beat the prior guidance.
• The 2Q24 outlook appears to be better than 1Q24, with revenue expected to increase by 5% to 7% QoQ and GM by 9% to 11%.
• We consider the primary bottleneck is the embargo of EUV machines to China from the Netherlands.

• Classys (214150 KS) started 2024 on a strong note with highest ever quarterly revenue and operating profit in 1Q24. Faster-than-expected consumables orders from overseas markets drove the overall performance.
• The proportion of consumable sales rose to 53% (1Q23: 48% and 4Q23: 43%), increasing by 42% and 32% QoQ. Increasing contribution from high-margin consumables sales improved the profitability substantially.
• Favorable industry tailwind, global expansion, and new launches remain main growth drivers. Classys still expects 2024 revenue of KRW225B, up 25% YoY. In April, Classys obtained FDA approval for Volnewmer.

• Sido Muncul (SIDO IJ) had a poor Q2-Q3 numbers, and investors sold off. 
• The recent uptick is driven by revenue growth and cost cutting exercises (mainly in wages) that improve margins.  
• Productivity may not stay at the same level thus Q2 24 numbers are key. Take your win first.